When importing from China, e.g., through Chinese B2B sites, like Alibaba or Made-in-China, we encounter some abbreviations used by suppliers. It’s crucial to get familiar with them to fully understand an offer and services provided by a chosen supplier. One of them is MOQ. What is MOQ, and what does it influence? Why do sellers establish MOQ?
What is MOQ?
MOQ (Minimum Order Quantity) is the minimum amount of articles one must buy for a manufacturer to agree to process an order. It means that if it’s 1500 pieces for the product, and we’re interested in ordering only 200, we won’t be able to buy it in this quantity. The MOQ is often given in the offers on online shopping sites, e.g. Alibaba, Made-in-China, or other platforms of this kind.
Below you can see MOQ for one of the phone case suppliers on Made-in-China. It’s provided in the “Basic Info” table, containing the most important information about the product.
However, it might occur that MOQ won’t be anywhere to find in the chosen product’s offer. In such a case, you need to contact the supplier and inquire about it directly.
MOQ in the case of a factory and a trading company
When looking for a supplier, e.g., on e-commerce portals, you can come across manufacturers of a product and trading companies. What’s the difference between a factory and a trading company? A factory is a direct manufacturer of an article, which means it creates it from scratch to order and sells it. On the other hand, a trading company is not a manufacturer of a product in its offer. That’s why manufacturers’ offers are usually smaller and limited to one or a few products, most often from one category. However, trading companies deal with various goods, and their stock may be very extensive and diverse.
MOQ will be less in the case of a trading company and more for products ordered from manufacturers. Supposing that while browsing a supplier’s offer, we notice that MOQ is merely several dozen pieces (e.g. 50 pieces), they’re likely to be a trading company. Manufacturing and selling such a small amount of goods is not beneficial for manufacturers.
It’s worth keeping in mind that MOQ is higher in the case of OEM and ODM orders. In both situations, a factory manufactures products following an importer’s requirements, e.g., affixing their company’s logo or applying a given pattern to the article.
What does MOQ influence?
Why do sellers establish a minimum order quantity at all? It has a lot to do with logistics, economics, and other factors. For manufacturers creating a larger amount of goods and selling them will be much more profitable.
First and foremost, minimum order quantity can impact the unit price. The more products you buy, the less you’ll pay for them because manufacturing a larger amount of goods is cheaper. Some suppliers provide details about the price’s dependence on the order’s size in information about a product. In the picture below, you can see how the cost of one phone case changes with increasing the order.
MOQ in negotiations
While preparing for import, one of the most crucial matters is determining and following your budget. When checking MOQ for a chosen product, one must consider their financial ability. If the MOQ exceeds it, it’s better to give yourself more time and look for other, more beneficial offers. This way, you’ll avoid burdening yourself financially.
Some sellers will be prone to negotiate MOQ, but we recommend avoiding it. There are some situations when a supplier agrees to lower the MOQ. However, it turns out later that the product’s quality is worse than expected. Dishonest suppliers execute smaller orders, but at the same time, they save on the quality of materials used for the goods’ production.
Deciding to buy goods when their MOQ exceeds your financial ability or initial arrangements may not be worth it. It can occur that despite the lower unit price, ordering a larger amount of products will turn out not to be profitable for you. Therefore, such a transaction poses a risk of too much financial burden and losses.
- MOQ (Minimum Order Quantity) stands for the minimum amount of goods one must buy from a chosen supplier.
- Primarily, it influences a product’s unit price. The more we order, the cost for one unit will be lower.
- However, one must keep in mind not to treat MOQ as a tool in negotiations.
- On the one hand, you have to consider your financial ability and the profitability of placing a large order.
- On the other side, if you aim to lower the MOQ, be aware that dishonest manufacturers will send you products of lower quality. This way, they want to guarantee a similar profit for themselves.
- Remember to always ask the supplier about MOQ and to place orders according to the previously established budget.